What impact will the metaverse have on the superyacht industry?

Legally, there is no definition of 'metaverse' - so, what is it?

Simply put, it is a form of cyberspace that holds an alternative digital reality through shared interactive and 3D experiences, using virtual reality, augmented reality and video. This virtual realm formally entered the mainstream in October 2021, when Facebook rebranded itself as Meta (Meta Platforms Inc.). This next version of our Internet, Web 3.0, promises to be more immersive, interactive and collaborative.

Due to the recent COVID-19 pandemic and technological advancements, much of our world is already being redefined in how we interact and work. The metaverse will see this change even more.

Whilst some say the metaverse and everything associated with it is overhyped, others say it is an inevitable future. Although pioneers are already deep into building the experiences, creating and expanding this virtual world will take time.

So, how will this virtual world run in parallel with reality? And how will the yachting industry respond?

New gatekeepers: How will it be controlled?

This virtual world comes with questions of both wonder and concern, especially regarding the regulatory framework. It is hard to fathom how things should be when dealing with such an unknown quantity. A crossroads lies ahead. Will metaverse developments lead us down a dark, dystopian route or a more utopian one that is better for everyone?

Similar to our current Internet iteration, there may be a dark side – a dark web. This dark web may extend into the metaverse as it develops. Perhaps it will be susceptible to hosting virtual marketplaces, such as the Silk Road. How will this impact the industry? Whilst the industry in its heyday used to thrive from lacking regulation and professionalism, times have changed. Overseeing the metaverse is a difficult task that needs to happen to allow for the safeguarding of industries.

Web 3.0 exposes new categories of personal data for processing in considerable volumes. Privacy for most yacht owners and guests is already vital, with NDAs commonplace. So, what will data protection be like in this new, virtual world? Will owners be able to stay covert? Will people's avatars be responsible for their actions or the person themselves?

Whilst all these questions are floating in cyberspace, there has already been evident trouble regarding controls. The market for unauthorised NFTs is just one example. Hermes is currently suing a digital artist, Mason Rothschild, for selling unauthorised Hermes bag NFTs. Similarly, Nike is suing StockX, claiming they are free-riding on Nike's trademarks through fake NFTs.

New assets: Non-Fungible Tokens

A discussion about the metaverse isn’t complete without discussing NFTs, what they are, their function and their use in yachting. Said NFTs (Non-Fungible Tokens) are unique digital assets using blockchain technology, and this form of the digital ledger can be sold and traded within the metaverse.

The Metaflower Super Mega Yacht NFT sold for $650,000 (c. €578,740) in November 2021. This NFT is part of a series of Sandbox NFTs related to Fantasy Islands, where you can purchase unique NFT villas, speedboats and Jet Skis. Owned by Republic Realm, Kostas Ketikidis, one of the co-founders, explained, “Fantasy Islands were the first-ever metaverse project that combined those two attributes: metaverse real estate plus NFT.” He added, “The Metaflower is a 1/1 ultra-luxury mega yacht that was auctioned off for 149 ETH [approx. $650,000], and it still holds the record for the highest price of an NFT sold on the Sandbox platform.”

However, Andrew Grant Super, managing director of Berkeley Rand and senior partner of Deer Hague Inc, noted, “NFTs should never be judged on financial value alone.” It is also about community building, belonging and emotional value; a sentiment voiced by Ketikidis, “Our online community is the backbone of everything we do.”

Whilst some are sceptical about NFTs, what is evident is that owning an NFT as an asset may show credibility and wealth to others. Nobody needs an NFT; therefore, being able to show your virtual artwork wherever you go could heighten social status, an attractive benefit for UHNWIs. These high-end values are evident within the Bored Ape Yacht Club. Multiple celebrities have bought into this collection of 10,000 ape avatar NFTs with various traits and attributes. What makes this collection such a big deal is the minimum cost of entry is 93 ETH (c. $224,000/€199,300), and there are a finite number of them to gain. With celebrities buying in, they are becoming more and more valuable.

When it comes to the yachting community, after recently enjoying himself on a physical yacht, the rapper Quavo has partnered with Bitcoin Latinum to launch Cyber Yachts. An NFT collection of 888 yachts, exclusively offered on the UnicoNFT marketplace for sale in Bitcoin and Bitcoin Latinum. The purchase of these NFTs will also come with experiential bonuses such as access to private parties. Similarly, Cloud Yachts, who claim to be the first digital yacht dealer, have joined forces with Denison Yachting to offer their NFTs of superyachts, which launched at the Miami Yacht Show 2022. The purchase of these NFTs will also allow owners to get VIP access to exclusive events in the yachting community.

This development of NFT utility is happening across industries. Next year (2023), Gary Vaynerchuck’s NFT restaurant in New York is opening. The Flyfish Club is essentially a modernised members-only dining club concept, where diners purchase the NFT to get them through the door. Super stated, “Since last year his company, Deer Hague, is getting involved in fractional ownership via NFTs of the most valuable items on board the yachts.”

This could be the first example of NFT use in yachting, whereby there is “no sale or removal of an item, nothing changes for the owner but a minute proposition is owned by an aspirational wealthy community who want to be associated with the yacht or even the owner.” Perhaps, next, we will own a superyacht NFT that gets you one subsidised week of charter. Alex Jimenez (@theyachtguy) involved in Cloud Yachts, observed NFT utility as "another wave of tech that the industry needs to stay on top of." He added, "In 2010 it was social media and at the time most laughed, ‘this is for kids’… 12 years later you'd be hard-pressed to find anyone in the industry that isn't on social media."

New economy: The rise of cryptocurrency

This transactional process of NFTs is through cryptocurrencies. Super explained, “NFT and cryptocurrencies are intertwined, where there is cryptocurrency there is going to be a demand for NFTs, whatever that looks like.” He said that cryptocurrencies are widely owned by the owner and chartering community of superyachts, so it is “natural they want to start using that as a transactional basis for chartering or buying superyachts.”

Whilst, like everything else in this not yet fully known territory, cryptocurrency divides opinions. It is an obsession for some, and others see it as a speculative bubble, bursting as quickly as it arrived. But the reality is that today there is already an acceptance of digital currencies in the luxury world; buying and selling superyachts in cryptocurrency.

One of the few brokerages accepting cryptocurrency payments is Ocean Independence. Its sales director Toby Maclaurin said, “Our role of brokers is to facilitate and encourage charters or yacht sales, no matter the currency.”

Super predicts that “crypto alone will change the model of brokerage in years to come, with clients coming in with crypto.” Adding credence to this theory, Maclaurin states that Ocean Independence “wants to open up new markets and make yachting as accessible as possible.” He goes on to say that “cryptocurrencies are not only a new platform to do this but also a door to step through into the metaverse world.”

New pitches: Marketing and selling in the metaverse

The past two years have been unconventional. With significant shifts approaching, 2022 is earmarked to be the bounce-back year for many industries. In yachting, Super suggests that this next shift will likely come from new owners emerging from the "crypto wave."

We are seeing more and more articles asking if businesses are ‘metaverse ready’, but what should they be doing? How should the yachting industry be gearing up? Luxury brands such as Gucci are already leading the way with virtual versions of products, presenting massive scope for marketing potential.

Sceptical or not, this Web 3.0 is already allowing for advanced marketing techniques. Hrish Lotlikar, the co-founder and CEO of Superworld, said that the metaverse "gives marketing back to the individual who may curate his/her/their retail goods or services to a targeted, built-in community."

Marketing will become more engaging, reliable and targeted, drawing on personalised experiences.

“Metaverses are going to become a crucial place for all yachting companies to embrace; within 36 months, they will all have a presence on the metaverses,” predicts Super. He goes on to explain that “the challenge is there will be many metaverses, and they have to be on-brand, and they won’t all be.” Ocean Independence already “envisage needing to go further than just virtual tours and NFT transactions in the metaverse.”

New experiences: Guest expectation - virtual vs reality

Could luxury travel experiences, such as yacht charter, get any better? Guest experience has always been at the top of the agenda in yachting, and metaverse capabilities may be the key to improving it in the future.

Today, especially in light of the pandemic, there has been an increased demand for optimised experiences. A try-before-you-buy mentality has infiltrated into most industries, such as taking 3D virtual tours around somewhere before you visit, experiencing virtual and personalised itineraries before saying yes, and more enhanced, immersive booking experiences.

Technology is already allowing companies to augment further and amplify experiences, and supply more experiential travel in yachting. When explaining the work of Berkeley Rand, Super explains that “the purchase or charter of a yacht doesn’t end with the physical yacht but is a gateway to a lifestyle; set of experiences in special places.” Berkeley Rand is seeing significant comments about the yacht market not being enough for “bored billionaires” who are dreaming bigger and wanting more. Their work brings together designers, creators, architects and engineers to give more, to get immersive and visceral experiences to yacht owners and charterers.

When it comes to digital marketing, several hospitality brands such as the Marriott Bonvoy are already beginning to embrace new forms, enhanced booking processes and even launching travel-inspired NFTs. The claim is that these tools improve guest satisfaction, as expectations are managed in a whole new way, increasing decision and booking rates.

How could this new level of guest satisfaction and engagement be transferred to the yacht industry? Perhaps it will open up the market – a potential client could experience a yacht charter virtually before committing. An owner may be unsure about the next stop on the itinerary, so they could look around virtually before wasting the miles. In terms of the pre-boarding experience, yacht crew could meet guests virtually through avatars in virtual concierge services, enhancing interaction and gaining even more information than the standard preference sheets before stepping on board.

New world: How sustainable will it be?

But how good is all of this for our planet? The future of our world is built upon the choices of today. When it comes to shaping our future world, it is vital to discuss responsibility and sustainability. We have seen evidence of this through the rise in sustainable yachting discussions, but what impact will the metaverse have?

There are bodies slowly emerging to help manage this. The consulting and creative agency, Eco-Age, which specialises in sustainable strategies, has recently launched an Eco-Verse division. It has “designed this to help clients enter the NFT and metaverse market whilst ensuring they meet ethical, environmental and social standards. The Eco-Verse division will support companies seeking to enter the metaverse, ensuring the right governance is in place to guarantee equitable and moral standards.”

Whilst no-one knows what the metaverse will be like (and indeed its purpose), it is difficult to assess the benefits. Will it benefit society and the environment? Or will it hinder it?

It is, however, inevitable this virtual reality scope of the internet will substantially increase the volume of data collected and stored – and data processing comes at an environmental cost. Simply minting or transacting an NFT uses a lot of energy; the sheer scale of the processing power needed to mine cryptocurrency is alarming. For example, to mine one bitcoin takes 72 terawatts. Various media outlets have reported that some dead coal plants are being reopened to supply this fossil fuel energy back to Bitcoin miners in the US, providing terrible consequences for the planet. The energy consumption of data centres is enormous, even if they are moving to cloud data which is slightly more environmentally friendly.

Alongside this power consumption, there is the physical waste, with warehouses full of fried computers from bitcoin mining. So, whilst some companies state that they are using renewable energy to process data, there is still vast mountains of physical waste to contend with.

Another controversial topic is social sustainability. Will it be more inclusive and equal as promised by the decentralised way of constructing the metaverse, or will it exacerbate inequality? There are also data privacy issues, especially in the private world of UHNWIs.

On the flip side, Superworld is hoping that its community "sees the metaverse as a catalyst for conversation and a space to bounce ideas off of one another to make positive impacts". Superworld's vision is “to help build a better world and move toward greater sustainability for yachts".

This is highlighted through giving back via their NFT transactions. “Half the proceeds from the sale of the superyacht NFT will go to Sea Change, a marine conservation organisation," states Superworld. Eco-Age supports this; it states that to help superyacht companies enter the metaverse world, “there are so many things we could do… An immersive world where you could go and discover about the ocean and the incredible projects that are being done to try and protect it. We could create NFTs which could give back to different ocean projects.”

Innovation in sustainable yachting technologies can also be harnessed within the metaverse. For example, simulations and re-designs in making a yacht more energy efficient and building realistic virtual counterparts that simulate environmental conditions could benefit scientific research and innovation. There are also specific environmental benefits that the metaverse proposes, such as virtual activities and more remote working. However, it is harder to see where this will ultimately translate within yachting. Eco-Age emphasises that “we need to make sure that what is being created in the metaverse is sustainable but also respectful of the real world, ensuring that we don’t make the same mistakes that we have with our planet”.

A new future?

If you asked the yachting industry 50 years ago to imagine a world with online purchasing, interactive booking systems or simply information on demand, this would likely have seemed incomprehensible. Today we have all that and much more. We're living in a different world and industry compared to the past.

Take yacht design, for example. Could we have imagined the sleek, dynamic and sporty versions of mega yachts today versus the traditional, classic sail yacht of the past? The changes that the industry has undergone over decades is profound. Whilst some of the development and speculation surrounding the metaverse may seem radical, change is constantly happening.

The current issues that we, as an industry, face associated with the development of the metaverse can be pigeonholed into a few main categories. Firstly, the environmental impact and energy consumption linked to blockchain technology are concerning. The second is the legalities, especially within the industry; intellectual property protection and data and privacy are fundamental to yacht owners. Lastly, there is the element of access and availability; the metaverse is a decentralised playground, where anyone from anywhere can be involved. When it comes to unique and luxury industries such as yachting, will this dilute its charm?

It isn't all negative though. The metaverse and associated technology could have some real benefits for the industry. Guest satisfaction is seemingly one of these; through increased and immersive experiences, stakeholders can manage guest expectations on a whole other level. The design and build process could also benefit shipyards, designers and owner representatives, meeting in virtual boardrooms with 3D and interactive models. This would alleviate many travel and logistical barriers that individuals face.

We are currently all pioneering and building this new world, and while there are no experts it does raise eyebrows as to how it will turn out. As Maclaurin from Ocean Independence states, it is going to be "an exciting voyage of discovery.”

The absurdity with the metaverse is there are no limits, unlike the physical world. This is why navigating it is currently a mind-boggling task. It will be interesting to see how an industry built on tradition and legacy will take to this new world. Will it break out of traditional moulds and embrace it? Will it even have a choice? We are about to find out.